I went to Opportunity Collaboration skeptical. Why was a conference on poverty alleviation being held at a beach resort in Mexico?

I left Opportunity Collaboration on Tuesday morning in awe of what the conference had accomplished. It was a rare masterpiece of an ‘unconference’, organized by Jonathan Lewis of MicroCredit Enterprises, and put on by COO Topher Wilkins with the help of quite a strong team of volunteers.

While I would rather have been less separated from the local communities of Ixtapa and Zihuatanejo, Mexico, I must admit the setting did serve the purpose of allowing the 300 attendees to connect deeply in a relaxed environment.

The attendees, called “delegates”, were a mix of entrepreneurs, social entrepreneurs, investors, foundation directors, and non-profit directors. The conference also welcomed 50 Cordes Fellows which greatly added to the age and geographic diversity of the crowd.

The conference ran from Friday night through Tuesday night. I left Tuesday morning to get back to iContact as we have a very big week getting ready to move 235 team members this Friday to our new offices in Morrisville.

The schedule for each day looked something like:

8am – Swim in Pacific/Breakfast
9am – Colloquium for the Common Good (Discussion on a Reading in a Group of 25)
11am – Open (we used it to convene a group of millennial social entrepreneurs each day)
12pm – Lunch, with breakout groups called cluster forks
1:30pm – Wellness time – Soccer, kayaking, volleyball, sailing, archery
3pm – Collaboration Challenge (topical discussions)
5:30pm – Open for 1-1 meetings
6:30pm – Dinner, with breakout groups called cluster forks
8:30pm – Companies and Causes – 60 Second Pitch Session
10:00pm – Networking on the Deck

There were no panels and no keynotes. This led to people having the time to connect in deep conversations. It was one of the more enjoyable long weekends I can remember in my 26 years of life. Having the opportunity to engage deeply with some of the most innovative practitioners in the field of poverty alleviation and social entrepreneurship was immensely inspiring and beneficial.

Being laser-focused on getting iContact to an IPO in the next couple years and now having a great staff who can attend our 25 or so company trade shows each year, I’ve scaled back the number of conferences I attend in the past couple years. I tend to limit it to Summit Series, the Skoll World Forum, Renaissance Weekend, and a couple investment bank or analyst conferences per year. I will now add Opportunity Collaboration to the select annual list.

Why Did I Choose to Come?

OppColl was talked about heavily when I was at the Skoll World Forum in Oxford in April and came recommended to me by people whose opinion I trust–Nathaniel Whittemore of AssetMap, Kim Scheinberg of Presumed Abundance, Jonny Dorsey of Global Health Corps, Mike Del Ponte of SparkSeed and Ben Abram of Westly Group. And so I signed up, not really knowing what would come of it.

My interest in being at OppColl was four-fold.

Vacation & Strategic Reflection: After working non-stop since February on our $40M Series B fundraise at iContact it was good to take three days off for a mini-vacation. Any time I can get out of my normal environment I find I can think more clearly about our strategy and get a big picture perspective. It turned out to be quite a valuable experience just from an iContact perspective, as there were a number of deep discussions on leadership I gained from and I wonderfully ran into at least ten of our customers who I always love connecting with about what they think about our company and product and what their additional needs are.

A Passion for Ending Extreme Poverty: A large part of my interest in attending goes back to a lifelong passion I have of wanting to be part of a generational movement to end extreme poverty in our lifetimes and learn all I can about the topic. In a world with so much, it just does not make sense that 2.5 billion people live on under $2 per day and 22,000 children five or younger die every day in the developing world—most needlessly from preventable disease and starvation. I think I can make the biggest difference in extreme poverty in the mid-term via investing and private-sector job creation, but I’m very aware that it requires all three sectors (government, business, and civil sector) to work together. To actually create sustainable economic development the trifecta of transparent, non-corrupt, responsible, and well-run government, civil sector (NGOs/NPOs), and businesses must exist. OppColl does a great job of bringing together folks from all three sectors to collaborate.

Nourish International: The non-profit organization for which I serve as Board Chairman, Nourish International, is at an important point in its history. It is transitioning from a completely donor-reliant model to a more sustainable model that includes a portion of its revenue from earned income. I came to connect to other non-profit directors and board members that have successfully created substantial earned income models for their organizations.

Humanity Fund: I launched a small personal investment fund called the Humanity Fund in January. Going to OppColl was perhaps the easiest way to connect directly with the leaders of the microequity field. Through the Humanity Fund we invest $10k to $100k at a time in socially responsible high-growth for-profit businesses in Africa, Latin America, and the USA. This is a small effort for now in which I want to dip my toes into the water and make a couple investments per year as a way of gaining some learning lessons, getting exposure to high-growth businesses in “frontier markets” and investing in creating jobs in high-growth socially responsible businesses that are growing quickly. My hope over time is to show that it is very possible with the right structure, even with the challenges of transaction costs, trust, and liquidity, to achieve above-market returns by investing in microequity and investing in the missing-middle of SME financing in which growth capital simply is not presently available.

The People

Of the 300 delegates, the folks I spent the most time with at the conference were:

The morning “Colloquium for the Common Good” offered an opportunity to connect deeply with a group 25-30 randomly selected delegates through two hours of discussion on a set of readings related to poverty alleviation (though I must admit I still struggle to understand why we were asked to read Antigone for day two). Our colloquium group was moderated by the well-known photographer Paola Gianturco. On the Saturday night a group of the millennial generation social entrepreneurs decided to have an ad hoc “indigenous community cultural immersion exercise” and went dancing in Ixtapa for a few hours so I regrettably missed out on the Sunday morning discussion of Antigone.

The readings for the Colloquium included:

A Letter from Birmingham Jail by Martin Luther King, Jr.

The Brothers Grimm, “The Wonderful Musician” (story)

Antigone (play)

Virginia Woolf, Three Guineas (essay selection)

Frantz Fanon, “On Violence in the International Context”, from The Wretched of the Earth (essay)

Hernando de Soto, “By Way of Conclusion,” from The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (chapter from study)

H.D. Thoreau, “Economy,” selections from Walden (essay)

The Millennial Social Entrepreneurs

We used the 11am hour two of the days to convene a group of younger entrepreneurs and social entrepreneurs to mind-map out on a whiteboard what we are currently doing to be part of ending extreme poverty. Then we shared our plans for scaling our impact over the next four decades and being part of the global movement to actually end extreme poverty by 2050. This was perhaps the hour of discussion I most looked forward to each day. Being able to map out the role I hope to play and gain feedback and go deep with Saul Garlick of ThinkImpact, Jonny Dorsey of Global Health Corps, Mark Hanis of the Genocide Intervention Network, Ben Abrams of Westly Group, Asher Hasan of Naya Jeevan, Leticia Casanueva of CREA, Amity Weiss of Rwanda Nziza, Mohamed Ali Niang of Malo Traders, and Elizabeth Dearborn Davis of Akilah Institute was intriguing and energizing.

After lunch we had time to relax or exercise. Having 90 minutes built in each day for “wellness” was unique and much appreciated for a conference. I kayaked, played soccer, swam, and even trapezed during this time.

Collaboration Challenges

The 3pm sessions convened groups of 30-40 in a chair-circle format to discuss a particular topic. My favorite “Collaboration Challenge” was the Millennial Social Entrepreneur themed session on Monday, particularly when we split off into a group to discuss for-profit social entrepreneurship and how to use the great power of markets and investment capital to increase social impact.

Some folks in the room thought that by definition you couldn’t be a social entrepreneur if you ran a for-profit business. No consensus from the group emerged, but I along with others made every effort to make the point that the entrepreneur who runs a socially responsible enterprise, regardless of entity structure, is a social entrepreneur. Personally, I define a social entrepreneur as a “problem solver who takes action.” To me, there are for-profit social entrepreneurs and non-profit social entrepreneurs and in some cases you can actually make a larger social impact by choosing to organize as a for-profit and be able to access capital and talent markets more effectively.

Example topics for Collaboration Challenges included:

Profits and Pitfalls in Social Investing

Fattening Up the Food Supply

Jobs at the Base of the Pyramid

Poverty and Pollution: The Poisonous Paid

Conscience of a Capitalist

Companies & Causes

Finally, each night after dinner was capped off by “Companies and Causes” a 60-second pitch session run by R. Paul Herman, author of HIP Investor. Perhaps 40 of the attendees pitched each night.

These pitches were generally good, with the sole exception of the unfortunate rule that if you combined into a larger group you would get as much as 3 minutes each instead of 1 minute. This caused the room to lose energy and the hour long pitch session to go 90-100 minutes, beyond the interest of most attendees who ended up hanging out instead in the adjacent bar. Overall, “Companies and Causes” was a great new addition to the conference, however I’d recommend keeping every pitch to 60-75 seconds next year. Less truly can be more.

Each night seemed to end with a spontaneous group of 20 and 30-somethings swimming in the Pacific.

So Should You Go to OppColl Next Year?

And so, if you’re working in the field of social entrepreneurship broadly defined, are interested in meeting the CEOs of entrepreneurial ventures that have a huge potential for both financial and social return, care deeply about humanity, or care deeply about actually ending extreme poverty in our lifetimes, Opportunity Collaboration is probably the best conference to come to for the deep relationships it affords.

It is not the best conference for content or big-name speakers–the Skoll World Forum on Social Entrepreneurship is much better for that–but it is the best conference I’ve been to for facilitating the creation of deep, meaningful, beneficial relationships that can help both parties make an increased positive impact in the world. The conference is not inexpensive, so if funding is an issue be sure to apply early for a 2011 Cordes Fellowship.

Hope to see you there in 2011!

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Were you there? What were your experiences? Do you wish you were? Is it justifiable to have an expensive conference on poverty alleviation at a resort if it brings great people together who in fact due to the connections they make are able to more effectively scale their social impact and more quickly end extreme poverty? We’d love your comments.

I’m in Oxford, England today for the first full day of the Skoll World Forum on Social Entrepreneurship. I’m making great connections with investors who care about social impact equally to financial returns and learning how iContact can be a more socially responsible enterprise.

Our vision for iContact is to “Build a great global company based in North Carolina for our customers, employees, and community.”

So I’m here to ‘go to school’ for three days on how to truly maximize return for customers, employees, and community so that we can in turn maximize financial results for our shareholders. Fiduciary duty can go along with human social duty!

To me, having a formal CSR program and caring about impact for the customers, employees, and community is just good business sense that in fact maximizes financial return.

Increasing Financial Results By Focusing On Social & Environmental Impact

Personally, I strongly believe, in today’s new world, ensuring your business provides a positive social and environmental impact (or at least not a negative one!) will increase your financial return, not decrease it. I’ve seen this happen with numerous for-profit socially responsible companies like Ben & Jerry’s, The Body Shop, Whole Foods, Burt’s Bees, and Salesforce.com.

How can focusing on social impact improve financial results?

How can focusing on social return improve financial results? In three simple ways.

The type of employees who want to work at companies that care–companies that put equal emphasis on profits and purpose–are the most productive and often most aware and intelligent team members.

There is a growing movement toward consumers who care. Consumers will have much more brand loyalty to a company that they know cares and makes a positive social impact.

When customers become passionate about a brand they talk about it more and more people will write about it.

The Tipping Point

After 30 years of so many in the social enterprise field working towards this, the tipping point has been passed wonderfully and thankfully. As the Dean of the Oxford Said Business School Colin Mayer said last night, the financial crisis has shown that short-term focus on only financial results does not lead to long term success.

Organizations like B-Labs have succeeded in changing public policy toward the benefit of companies who care. Self-interested (”greedy”) business owners who want to make money will now wonderfully benefit financially from implementing a formalized Corporate Social Responsibility program and ensuring they track and social impact and environmental impact.

The invisible hand is now starting to work toward social good with economic growth now that incentives are being realigned properly toward sustainable economic growth. While there is much more path to tread toward truly aligning policy incentives and consumer purchasing behavior toward companies who care–it is happening and the tipping point has passed! Eureka!!

Social Good With Market Returns?

Right now a panel called ‘Social Good With Market Returns’ is about to begin. I’ve been tweeting a lot about the conference via @ryanallis.

Nick from JP Morgan is talking about the Social Finance group at JP Morgan. Nick is not a “normal banker.” They invest in social enterprises that have a double-bottom line (financial and social). This social investing field is also being called “Impact Investing.”

Ensuring Off-Balance Sheet Externalities Are Positive

There is a engaging discussion going on now at the panel around off-balance sheet externalities (positive and negative) of impact (positive or negative). Nick says “every time we make an investment we are creating externalities.” He says these externalities can be positive (jobs) or negative (pollution). He says “for the first time the investment community is measuring the social impact of what they are doing and only investing in companies that create net positive externalities.”

This discussion is at the core of global history of the past 200 years as the ideological battle between communism, socialism, and capitalism has been waged. The new consensus that is emerging here is that what has won (and in fact what must win for the sake of humanity’s ability to continue) is socially responsible capitalism. As John Perkins points out in Hoodwinked, there is nothing inherent in the model of Capitalism and the competitive market economy that require off-balance sheet externalities that destroy the world.

Taking Into Account the Full Cost of Environmental Damage

Now the discussion is revolving around how to adjust public policy to enable the true cost of negative externalities to be accounted for in the financial accounting results. Some are saying the Holy Grail for improving the world through business is to make all investing ‘impact investing’ by taking into account the true cost of environmental resources that are not renewed into Generally Accepted Accounting Principles (GAAP).

“Better accounting for negative externalities is really important” said John McCall MacBain of the McCall MacBain foundation just now on the panel. The discussion is revolving around environmental costs being forced on any organization that destroys a natural resource (public good) that does not replace it sustainably and the impact this would make on ensuring warped incentives are not provided to global financially-focused Boards of Directors.

The discussion has shifted to bringing the silos of philanthropy, impact investing, running non-profits and socially responsible for-profit entrepreneurship.

Borrowing a meme from my friend Judith Cone who worked at the Kauffman Foundation and now works at UNC as a Special Assistant to the Chancellor for Innovation and Entrepreneurship, perhaps it is all about where goodness lies. Goodness can be in the heart of the public sector official, for-profit socially responsible entrepreneur, non-profit executive, global multinational Board member, activist, or investor.

Nick O’Donohoe from JPMorgan is speaking about how JP Morgan can access capital high net worth individuals and institutions they work with which want to tap into investment funds specifically set up for investing in companies who put an equal emphasis on social impact as financial results.

Questions & Comments?

What questions are there on this topic of public policy changes and investing in companies that create social good while achieving market returns or above market returns? I’d love to discuss this more!

As a technology entrepreneur and angel investor in both North Carolina and East Africa, I’ve been thinking about what comes next in microfinance? To me, it’s microequity.

I had a fascinating breakfast this morning here in Oxford on the topic of microequity. The field of microequity is nascent, but rapidly growing. To me microequity is investing small amounts in for-profit socially responsible companies, particularly those in the developing world. I’d consider the core of microequity investment ranges are between $5k and $100k in for-profit socially responsible companies in the developing world.

Microequity investing can fill a tremendous need for capital for SMEs that can help a small business grow when microloan maximums have been reached but an entrepreneur is not yet able to access banks and larger scale institutional investors.

Effectively, microequity can be seen as seed funding and angel funding for companies in the developing world–with the exception that investing $25,000 in an existing company in the developing world really is growth capital rather than seed capital as this amount of capital can go much further and in some cases get a company past cash flow positive.

A Model for Microequity

From my vantage there seems to be a profitable (and hence scalable for greatest social impact) model that is now being developed investing in these microequity capital ranges in many parts of the world and filling the gap that sometimes exists between microloans, banks, non-profit investing funds, and institutional capital while creating tremendous social impact through sustainable job creation and economic development.

Overhead costs, deal selection, accounting transparency, and methods of obtaining the return are perhaps the most challenging obstacles to achieving a market rate of return to the investment. We talked about how all of these challenges can be overcome. There is such a huge gap here that traditional finance has not yet solved and there so many high quality opportunities to invest in while making a tremendous impact.

One suggestion centered around taking a pre-agreed upon percentage of free cash flow (FCF, or effectively net profits) that is pre-agreed upon in advance. Another suggested revolved around tying returns to a revenue multiple since EBITDAs are easier to manipulate by non-audited smaller companies.

Personally, my interest is in helping small, high potential companies based in the developing world owned primarily by local entrepreneurs access the mentorship and financial resources they need to grow into the future leading companies in their respective countries and eventually take their firms public on regional stock exchanges when run. It will likely take a couple decades to bring together the educational (human capital), governmental, and infrastructural resources needed to help small companies run by smart ambitious local entrepreneurs thrive–but the trend toward local entrepreneurial-led (often ICT-related) economic growth is already happening in Kampala, Kigali, Dar es Salaam, and Nairobi and so many other emerging markets globally from what I’ve seen.

To me, small business growth is the key to sustainably growing an economy and effectively increasing per capita incomes (otherwise known as reducing the number of people in urban and rural areas in poverty) and I believe through the right local trust networks for deal flow and local entrepreneurial support and mentorship models it is quite possible to achieve very strong returns investing today in high-potential for-profit socially responsible companies in the developing world.

Not Replacing NGOs, Non-Profits, and Public Sector

Investing in for-profit socially responsible companies in the developing world does not replace the need for a strong effective transparent public sector and does not replace the need for investments from non-profit organizations and NGOs.

Rather, it is additive to creating sustainable bottom-up economic development that creates local constituent-based growth in a way that reduces inequality of opportunity–and it happens to be where I think I can add value with my background as a venture-backed technology entrepreneur at some point.

Creating a venture capital fund that puts social return equal to financial return is something I hope to focus on someday down the road and create a scalable model that provides market-rate returns (15-20% per annum) investing in high-growth entrepreneurial ventures in the developing world run by local entrepreneurs (likely in the energy, solar, water, agricultural, low-cost medical device, software, and Internet fields).

I’m in Dedham, Massachusetts tonight (pronounced Dead-um I think) just southwest of Boston.

Tonight, I started Day One of the Class of 2011 EO/MIT Entrepreneurial Masters Program. The program is a four day a year/three year program open primarily to members of Entrepreneurs’ Organization who are founders or co-founders of companies doing at least $1M per year in sales. It is held here at the MIT Endicott House.

Tonight we started with introductions. So far, I’m impressed with the group. I’m particularly impressed with the international diversity of the attendees. Of our sixty four classmates, twenty eight are from outside the United States. We have classmates from 16 countries including the U.S., Canada, Germany, Hong Kong, the United Kingdom, Spain, South Africa, El Salvador, Nicaragua, Guatemala, India, the Netherlands, the Phillippines, Australia, Mexico, and Saudi Arabia.

Going into this evening’s introductory session, I knew only one other attendees, the 26 year-old brilliant phenom Sachin Duggal of Nivio. I met Sachin while in New Delhi in February and have to say he is on the list of the 10 Most Impressive People I’ve Met in the Last 12 Months.

During the introductions, I circled the names of a few folks to ensure I speak further with; Craig Fuller of Transcard, Chris Hanahan on Rotten Gorilla, Itu Kgaboesele of South Africa’s Sphere Holdings, David McMullen of RedPepper, Cam Mochan of The CRUX Company, Francisco Prado of El Salvidor’s d’Anconia Investments, Shashi Reddy of Case-mate, Susan Hrib of Signum Group, Sebastian Ross of Spain’s Grupo Intercom, and Martin Schuurman of the Netherland’s fastest growing company, Inkoopcollectief Yiggers.

I’m also glad to have learned that at least two of the attendees are iContact customers so far.

I’m looking forward to tomorrow. We’ll be hearing from Verne Harnish on the Rockefeller Habits, Patrick Thean on the One Page Strategic Plan, John DeHart on Nurses Next Door, and Geoff Smart on TopGrading.

Speaking in front of 1,500 people can be a little scary. Especially when you’re about to pull your pants off and dance in front of them.

When I was 16, I ran for President of the Manatee High School Key Club, a community service organization. I got up to give my speech. My knees knocked. My hands shook. My voice faltered. I lost to Mark Pinto.

Going into college, I was still a nervous public speaker. I tried to imagine the audience in their underwear but that was just awkward and didn’t help at all.

I didn’t get over the fear until my 2nd year when I had to speak to 60 attendees at the UNC Entrepreneurship Club every Tuesday at 6:30pm.

Finally, I could speak to a group of college students without nerves.

But them came speaking to ‘old people.’ You know, those scary adult-people. I didn’t really get over that fear until early 2006. I spoke to 500 economic developers at the Southern Growth Policies Board Conference in New Orleans and then 400 professors and administrators in Orlando at the National Association for Community College Entrepreneurship Educators.

In 2007, I ended up speaking in front of about 3,000 people over the course of many different events. In 2008, I spoke in front of 8,000.

But none larger than the speech on November 8, 2008.

I had already introduced Robert Kiyosaki to the group the day before–one of the great honors of my entrepreneurial life. His book Rich Dad’s Guide to Investing planted the seed in my mind and provided the path at 17 to “build a company and take it public.”

I’m in Aspen, Colorado for an inspiring gathering over Labor Day Weekend. It’s Friday night at 10pm and the dance floor is calling–but I am driven to write first and dance later.

The gathering is called Renaissance Weekend, started by Ambassador Phillip Lader and Linda Lader in 1981. I first heard of the Weekend on my way to the Orlando airport in 2006 while serendipitiously sharing a taxi with former U.S. Congressman Martin Lancaster, the current President of the NC Community College System.

We were on our way back from the National Association of Community College Entrepreneurship (NACCE) conference. He told me how the weekend gatherings, originally in Charleston, SC over New Year’s and now in Aspen, Tuscon, and Monterey, brought together driven and accomplished people to discuss public policy, science, business, religion, and more.

I heard nothing more of this gathering for two years, until this June when my friend Stever Robbins gave me a call. He nominated me to attend and wonderfully I’m now here.

Today was the first full day of Renaissance. I must say from the first day that it has been a wonderful experience so far. One of the ways the Weekends are different than any other conference is that every attendee is assigned to present briefly (for 2 minutes to everyone and then for about 10 minutes in numerous breakout panels) on either what they know most about or what they are most passionate about. This practice enables attendees to hear from experts in their field ranging from astronauts to cosmologists to entrepreneurs to neurosurgeons. At this Weekend, there are about 300 attendees.

Today I was assigned to present for 2 minutes to the group on “An Immodest Proposal – If I Could: Serious and humorous proposals on policy, work, religion, and marriage.” I then participated on a panel with six others called “Why Not Change the World? Examples and Visions of Social Entrepreneurship & Community Service.”

At noon, I experienced the most intellectually stimulating hour of my life since the panel on global peace at Fortune Brainstorm with Jeff Bezos last month. My friend and venture capitalist Nick Beim from Matrix Partners moderated a panel called “Putin’s Czarist Plan: Is His Russion a Neo-KGB State” that I hope to post about next.

Tomorrow, Saturday morning, I’m presenting for 2 minutes at 9am on “When I’m 65 – A Red Bull Generation Envisions Their Professional, Personal, & Nation’s Future,” taking the afternoon off to go white water rafting for the first time in my life on the Colorado River, then returning for a 6pm discussion, “Must There Always Be a Bottom Billion: Promise & Pitfalls of Reducing Poverty, Supporting Social Entrepreneurs, and Assisting the World’s Less Developed Nations.”

As a short aside I’ll share a fun story. This visit is my first time in Aspen and the Aspen Institute since July 2006 for Fortune Brainstorm 2006. I recall then sitting next to John McCain for 10 minutes while watching the Germany-Italy World Cup game in the lobby of Aspen Meadows and then seeing him go to the back of the lounge to speak with Vinod Khosla, ostensibly about alternative energy. Thinking she was a passerby and not knowing then who she was, I asked Cindy McCain to take a picture of Senator McCain and I. She somewhat unwillingly oblidged, but alas, the camara battery was dead and no proof exists.

This is a place of ideas and action–action that leads to making a difference in the world. I’m fortunate to be here and look forward to sharing tomorrow night how the day goes.

Today through Wednesday I am the Fortune Brainstorm Tech conference in Half Moon Bay, California, about 45 minutes south of San Francisco. After a Segway tour along the Pacific this afternoon, the sessions began at 4pm. We’ve heard from Michael Dell, Jeff Bezos, Marc Benioff, and Brad Smith, the CEO of Intuit.

Here are some notes on what some of the panelists spoke about:

Dell

500,000 people per day who come onto the internet for the first time
large majority are outside the United States

Long term bull on the long term impact technology can have on society

Came back as CEO for second time

Put his ‘big ears’ on, listened to the employees

Thought of themselves as a company that listened

Will have about 2 billion conversations with our customers this year

centrally controlled tops-down is not most response way

We should have fiber to the home

Benioff

It’s not just company talking with customers, but customers talking with eachother in a one to many conversation

Customers are able to gang up on us

The acceleration of the soul of the world

Fareed Zakaria – Post-american World

The internet is the great accelerator in societal evolution

A change in the world can only happen if there is a change in conciousness

I’m out in Alta, Utah this weekend near Salt Lake City for the Under 30 CEO Summit being put on by Elliot Bisnow.

We’ve been skiing at Snowbird, heard from Ted Alemayhu from U.S. Doctors for Africa, chatted with Scott Fredrick from Valhalla Partners, and talked a lot about business, entrepreneurship, social entrepreneurship, and how we can work together to make a difference in the world.

Blake from Tom’s Shoes (which donates 1 pair of shoes to children in developing countries for every pair they sell) debuted his video “No Polo Window” announcing the launch of his leather boots campaign to reduce a foot disease called Podo in Ethiopia. Blake gave us each a pair and I’m quite happy to report they are awesome for breakdancing.

I just sent this to a couple of my friends and wanting to blog it as well. I just watched the video of the much-talked about Gates speech on Creative Capitalism on Friday at Davos. For me, it was one of the most inspiring and influential speeches I have ever heard. Though Gates is not the best speaker in the world, his message is right on. The WSJ article on the speech is here and the video of the speech is here.

I especially enjoyed the Adam Smith quote Gates references:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

These improvements have been triggered by advances in science, technology, and medicine. They have brought us to a high point in human welfare. We’re really just at the becoming of this technology-driven revolution in what people can do for one another. In the coming decades, we’ll have astonishing new abilities: better software, better diagnosis for illness, better cures, better education, better opportunities and more brilliant minds coming up with ideas that solve tough problems.

This is how I see the world, and it should make one thing clear: I am an optimist.

But I am an impatient optimist. The world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone.

The great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement, and the most needy get the least — in particular the billion people who live on less than a dollar a day.

There are roughly a billion people in the world who don’t get enough food, who don’t have clean drinking water, who don’t have electricity, the things that we take for granted.

Diseases like malaria that kill over a million people a year get far less attention than drugs to help with baldness.

So, the bottom billion misses the benefits of the global economy, and yet they’ll suffer from the negative effects of economic growth they missed out on. Climate change will have the biggest effect on people who have done the least to cause it.

Why do people benefit in inverse proportion to their need? Well, market incentives make that happen.

In a system of capitalism, as people’s wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls, until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.

The genius of capitalism lies in its ability to make self-interest serve the wider interest. The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries. This system, driven by self-interest, is responsible for the incredible innovations that have improved so many lives.

But to harness this power so it benefits everyone, we need to refine the system.

As I see it, there are two great forces of human nature: self-interest, and caring for others. Capitalism harnesses self-interest in a helpful and sustainable way, but only on behalf of those who can pay. Government aid and philanthropy channel our caring for those who can’t pay. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.

Such a system would have a twin mission: making profits and also improving lives of those who don’t fully benefit from today’s market forces. For sustainability we need to use profit incentives wherever we can. At the same time, profits are not always possible when business tries to serve the very poor. In such cases there needs to be another incentive, and that incentive is recognition. Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to an organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.

This week’s Economist had a section on corporate responsibility, and it put the problem very nicely. It said it’s the interaction between a company’s principles and its commercial competence that shape the kind of business it will be.

The challenge here is to design a system where market incentives, including profits and recognition, drive those principles to do more for the poor.

I like to call this idea creative capitalism, an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.

Some people might object to this kind of market-based social change, arguing that if we combine sentiment with self-interest, we will not expand the reach of the market, but reduce it. Yet Adam Smith, the very father of capitalism and the author of “Wealth of Nations,” who believed strongly in the value of self-interest for society, opened his first book with the following lines:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”